Activity-based costing differs from a traditional cost accounting system in that it identifies several levels of
Question:
Activity-based costing differs from a traditional cost accounting system in that it
• identifies several levels of costs rather than the traditional concept that costs are fixed unless they vary specifically at the unit level.
• collects costs in cost pools based on the under¬ lying nature and extent of activities.
• assigns costs within the multiple cost pools to products or services using multiple drivers (both volume and non-volume related) that best reflect the factor causing the costs to occur.
• does not consider some product costs for inter¬ nal purposes that are considered product costs for external reporting.
• provides a more realistic picture of actual pro¬ duction cost than has traditionally been available.
LO.1
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